An extraordinary Treasury capital infusion may be needed to restore faltering foreign demand for debt issued by Fannie Mae and Freddie Mac, the two top home funding sources that the government is willing to rescue to save the housing market. The companies rely heavily on overseas investment, often up to two-thirds of each new multibillion-dollar note offering, to help pare funding costs and keep mortgage rates low. But foreign central banks have dumped nearly $11 billion (5.9 billion pounds) from their record holdings of this debt in four weeks, to $975 billion (522 billion pounds), and won’t return in force before it’s clear if — and how — the government will back Fannie and Freddie, some analysts say. More
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